Thursday, April 4, 2019

Hidden Costs

Just read this NYT article The Streets Were Never Free which talks about how there is a general perception that the use of public roads and parking spaces is free. For most commodities, when the demand of it goes up, the price of it goes up as well. However, not so for roads. Thus the congestion as everyone wants to use the roads during rush hour.

To clarify, most people do know that the streets are not actually free since their taxes pay for it, however since the cost is not directly paid each time, there is less of a direct association, and thus roads can seemingly seem free.

It reminds me of the recent news of China and India refusing to take America's trash. I think that has built a sense that producing waste is nearly free. People see the $50 that they pay to have their recycling and trash taken but the idea of environmental costs were largely hidden because it was someone else's problem.

Another way to put it is, because of the hidden costs and subsidies people don't have enough skin in the game. The tighter the feedback loop the better. Thus the congestion and the trash in our face will be a good thing long term as we will finally have to face up to the problem. The traffic isn't going to get better on its own. At what point is the 3+ hour commute just not worth it? Hopefully we don't need to wait to see the full effects of burning our plastics and trash before we take action.